Dear Mr Lewis
I am writing this blog to you and others who become victims of managerial fraud. It is yet to be decided if the Tesco £250 million profit shortfall is a fraudulent act, but financial oversight can hardly be the case with such high calibre executives. However, you with many other CEOs are at a loss as to what happened.
Assuming that you are a CEO who wants Tesco to survive and grow as a retailer, you will have a better chance of selecting good executives. From my research we can now identify, via the managers’ social interaction with co-workers: The Arrogant Fraudster, The Likeable Fraudster, the Tyrant manager and the Mediocre manager who all share a malevolent attitude to others and use organisations for their own needs. I have also discovered the Respectful manager who is consistent, benign, is self-aware, and shares a sense of equality and hard work with others.
The tried and trusted auditing Red Flags did not prevent the ‘accounting error’ as it was already used by your auditors in each audit, but Executive Impression Management could by selecting better managers who are not prone to deceit.
You already have an investigation underway to discover the culprits, I sincerely trust they will be prosecuted once they are identified as such. My research shows that fraudsters who are simply dismissed, tend to repeat their behaviour in future employments.
I have also found that co-workers to those who are guilty of this type of deceptive behaviour, have a tendency to leave their employer within 6 months of the fraud being discovered. Their confidence in management will have been severely undermined and in many cases they will have been very badly treated by those in authority. I recommend you arrange expert counselling for those who worked closely with the culprits as many will be preparing to leave. These people will have their foundation of trust blown apart and most likely need remedies to offset covert or open bullying and abuse.
P.S. You have of course protected the whistle-blower from emotional abuse and blackmail? Unfortunately because they have a moral compass and use it, whistle-blowers have difficult outcomes with losing their jobs, subsequent family dysfunction, depression and long-term unemployment.
Terry Sheridan is author of Managerial Fraud.
She is a Fellow of the Australian Institute of Management, member of the Fraud Advisory Panel (UK), member of the Australian Career Development Association and was awarded their Research of the Year Award in 2008.
Her publications include her PhD dissertation; numerous articles, both scholarly and for general reading, a chapter in Aviation Management, a recent US aviation security management textbook, many refereed conference papers and national research reports and has gained a reputation of being an able researcher and public speaker.
She is the Managing Director of Guardian Angel Holdings Pty Ltd having developed new methodologies for pre-employment screening of managers. She has held several executive positions in the past with public corporations, statutory bodies and companies as well as non-profit organisations.